I want to tell you about a pretty astonishing report I’ve just read – The Digital Universe Decade – Are You Ready?
According to research group IDC, last year saw a staggering 62% jump in the amount of digital information the world produced.
Apparently, that amount of new digital data is equivalent to a full-length episode of the TV series ’24’ running continuously for 125 million years. Or all the digital information that would be created by every man, woman and child on the planet ‘tweeting’ continuously for 100 years.
I knew we were addicted to the internet. But a 62% jump in data really spells out just how obsessed we have become with consuming digital information – from online movies to music and videos.
And if the challenge of dealing with last year’s data explosion – and that in a recession year – was daunting enough, consider this. Over the next decade the quantity of digital data is forecast to grow 44-fold. Put that lot on DVDs and you would have a stack that reaches half way to Mars, according to IDC.
Four ways to mine the data explosion
The good news is that the explosion in digital data creates some tremendous investment opportunities for us.
One of these is the move towards ‘cloud computing’. This increasingly common phrase essentially describes a situation in which tasks that were previously done on a personal computer are carried out remotely at a central location.
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Rather than having a computer processing power under his desk the user can simply access the same via the network, use it as and when he wants, and pay according to usage. For example rather than having your photos on your own hard disk at home, you could store them online ‘in the cloud’, calling them up whenever and wherever you want them – whether from your PC, from somebody else’s PC or from a mobile device.
In the September issue of Red Hot Penny Shares, I feature a penny share that is thriving on the back of the drive towards cloud computing. This is a company that is helping to solve the greatest challenge to our data addiction – the digital infrastructure. More on that in a minute.
And I can think of three other challenges that could create superb penny share opportunities. One is search. How will we be able to find what we are looking for in this ever growing pile of data?
Another is security. Every time we fill in an online form we give away some personal details that potentially could fall into the wrong hands. Today, 30% of digital data has to be protected in some way; this is forecast to rise to 50% by 2020. But will this be enough to beat the hackers?
A third issue is privacy. While we are quite happy to use the internet, connectivity and GPS location finding devices to navigate our way around the virtual and the physical world, we are not necessarily so happy for those worlds to follow us about. But each time we interact online, or simply by means of having a mobile device, our whereabouts, habits and preferences can be monitored. How can we control this?
The penny share backing up a multi-billion pound industry
These are serious issues for the industry. But the biggest challenge at the moment is the gigantic task of simply handling all of the data that must be created, transmitted, made secure and if necessary stored. The migration of data from individual locations to the cloud may make these things easier, especially in respect of eliminating duplicated data.
But still the challenges are huge. New words – ‘petabytes’, ‘zetabytes’ and ‘quintillion’ – are being coined to measure the data stack. And a massive and continuous investment in hardware will be required to keep handle it all. Digital data does not just travel by magic. It all passes through servers, networks and routers. Companies that supply this infrastructure will have to work overtime to meet demand. This is a nailed-on growth industry.
I have found one penny share that I believe is very cheap and right at the very heart of this industry. It is one of the shares featured in the September edition of Red Hot Penny Shares – a company backing up the explosive growth of digital data across Asia.
• This article was first published in Tom Bulford’s twice-weekly small-cap investment email
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